To realize debt freedom, it requires a powerful plan. Demolition must begin with a solid plan, and Debt Demolition is no different. I know, that seems like a “no-brainer”, but have you sat down and diligently designed your plan?
You Need a Plan
The great Zig Ziglar is famous for saying, “If you aim at nothing, you’ll hit it every time.” I’ve always liked that quote because it is a great reminder about the importance of planning.
Zero In Financial is built on the principle of planning to aim first, or in other words, zeroing in on your financial target. You must plan before you aim or you will be aiming at something you did not intend to focus on, or at worst, nothing.
You can settle for breezing through life with no plan, but you will end up going nowhere. All your efforts and resources could be expended aiming at the wrong target, and you will end up with an unintended result. Any target worth hitting requires some careful planning ahead of time and I think debt freedom is a worthy target.
Obviously, before the crew goes out to slam a wrecking ball against a structure that needs to come down, there is a plan. Thoughtfully, before the dynamite is placed in the nooks and crannies of a skyscraper destined to be flattened, there is a plan. Strategically, before the army of bulldozers steers its way to the ultimate mountain of rubble, there is a plan. Debt Demolition needs a plan.
Dreaming is part of the Plan
In the book Entreleadership, Dave Ramsey exclaims, “I learned that you have to dream and you have to do something about making those dreams happen.” I know this quote comes from a business book, but what better way to run the financial business of your life than like a business. Dave continues, “Having a dream that moves to a vision, then to a mission statement, and then is broken down into goals is essential to winning personally…” In my blog post “Get Out of Debt Fast! Your Why is the Way.”, I wrote about the importance of dreaming. But it can’t stop there. You must take that dream all the way to action, and that action begins with this plan.
The Plan Must be Personal
A financial plan is incredibly personal. Very few people that I know go around telling everyone every detail of their personal financial plan. A financial plan is emotional. Many of my clients tell me that it was difficult to face reality in their numbers. But, if you do not make the decision to plan A.S.A.P., your financial reality will not be what you were hoping for.
Jesus taught a similar lesson when He talked about discipleship in Luke 14:28-30. He said that no one building a tower would move forward on construction without sitting down to “count the cost”. After all, quitting halfway because the resources dried up would make the builder a laughingstock. The foundation for his tower would become a monument to his incompetence. What Jesus emphasized about discipleship – evaluating your situation and planning for the costs – certainly works for finances. And, what he pictures as the result of a builder without a plan, goes for demolition as well. Planning is at the heart of success.
Debt Freedom: How to Create a Powerful Plan
To get debt out of your life, there are two simple planning tools you need to use. Each of these instruments tells your cash what to do, where to go, and what its job is each month. I will discuss the second tool in a later post. But the first one is the most important: your budget.
You might be saying, “What? Wait! What does a budget have to do with paying off debt?” It was shocking for me too. I tried getting out of debt without a budget, and I have also pursued debt freedom with a budget. One of these methods worked and the other one did not. Guess which one was effective.
Creating a budget should not be a calm, casual afterthought in your financial life. You need to let money know who’s boss.
You need to sit down with your pencil, paper, and calculator and make those dollars dance! Get your Excel spreadsheet open or load up your fancy budgeting app, if you must. The tool with which you create the budget is not as important as the process of creating and carrying out the budget.
Budgeting is Emotional
Once more, let me reiterate that budgeting is emotional. I have found that people do not like thinking about the subject of budgeting. But this tool is the most essential tool for keeping financial goals on track. And it is the planning tool you must live by to keep your emotions in line with your financial goals.
I have asked clients to show me their budget, and I get a similar reaction that I’ve got from my daughter when asking to see her report card. They may be embarrassed, or they may be in denial. It is sometimes called “the bathroom scale effect”, for obvious reasons.
If this is you, do not be afraid to peer into your financial mirror exposing your true shape. This is the first step to getting financially fit. Do not worry, I don’t judge and no other financial coach that has a reputable practice will resort to shaming. I had to personally be okay with the reality that I was financially flabby before I could get financially fit!
Debt Freedom: RECOVER, GROW and ZERO IN
You must face your present situation to GROW your present pocketbook position. The budget is extremely important to ZERO IN on your financial target.
The real emotional part comes when you must glace back to RECOVER from past money mistakes. Of course, paying off debt means glancing back at the mistakes we will ultimately clean up. But it also helps to use past budgets as a baseline for adjusting spending categories going forward.
One of the excuses I hear when it comes to budgeting is: “I am not good with numbers”. But the issue is never about math. Budgeting does not require much math at all. The dilemma is truly emotional and psychological.
If you want to get into the mechanics of how to budget, read my four-part series: Achieve Your Financial Goals Faster. This simplifies the parts of a budget and will give you practical strategies to Zero In on your goals.
Just remember, your journey to debt freedom must include a budget. It is mathematically simple. It is emotionally tough. You can do it!